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'Hurricane' Edgar:
rookie governor's first session

Charles Wheeler III


Partisan loyalists and political score-keepers who've been unduly impressed — if not downright overwhelmed — by Gov. Jim Edgar's first legislative session could learn a valuable lesson from the meteoric career of Hurricane Hazle. Any true baseball fan knows the story. For those not similarly blessed, Bob Hazle was a 26-year-old rookie outfielder whose phenomenal hitting over the last six weeks of the season — .403 in 41 games —carried the Milwaukee Braves to the National League pennant in 1957. Yet within a year, Hazle's major league career was over.

When the opening session of the 87th General Assembly finally adjourned, 19 days and more than 20,000 paychecks late, Edgar's name headed everyone's list of winners. After all, the new Republican governor succeeded in muscling much of his agenda through the Democratic legislature, mainly by outlasting the big city politicos who controlled it. The governor from Podunk, as one Chicago columnist dubbed Edgar, actually managed to stare down the 13th Ward Democratic committeeman, House Speaker Michael J. Madigan, widely regarded as the quintessence of intransigency.

In truth, the rookie chief executive did very well in his first legislative session. He delivered on major campaign promises to balance the budget without higher taxes — keeping the 20 percent income tax surcharge in place —and to cap skyrocketing real estate taxes.

Equally important, Edgar's hard-nosed bargaining during the legislature's record 19 days of overtime earned him grudging respect from Democratic leaders as well as lavish adulation from Republican lawmakers unused to such gubernatorial steadfastness. "I never realized how tenacious he is, but I'm beginning to learn," said Madigan, minutes after the marathon spring session' ended. "People have said to me that we're very much alike, and I'm beginning to understand that."

Moreover, by treating Senate Minority Leader James "Pate" Philip (R-23, Wood Dale) and House Minority Leader Lee A. Daniels (R-46, Elmhurst) as equal negotiating partners — a status they seldom felt under former Gov. James R. Thompson-Edgar fostered valuable allegiances for the rest of his term. His deference to the wishes of the GOP leaders, particularly on the tax cap issue, could prove even more rewarding should Republicans win control of the legislature in 1992, which they have a 50-50 chance of doing thanks to the stalemate that has pushed legislative redistricting to a partisan tie-breaker.

As Hurricane Hazle proved, however, a sensational start does not always guarantee a plaque in Cooperstown. The sophomore jinx could be awaiting Edgar, too, in a variety of guises. Even his most vaunted achievements could contribute to his downfall in future days.

Consider, for example, the pitfalls inherent in the fiscal 1992 budget. In signing $27.6 billion spending plan, Edgar pronounced the state's fiscal house in order and touted a budget he said was balanced with no new state taxes. But the balance is tenuous; the budget is "built on quicksand," suggested state Comptroller Dawn Clark Netsch.

Wall Street bond raters shared her skepticism, lowering the state's credit rating a notch just a few days after Edgar signed the appropriations into law. Officials at Standard & Poor's said the drop reflected the state's "significantly weakened financial" operations and position during the past two fiscal years." While the fiscal year 1992 budget provides a framework for Illinois to

10/August & September 1991/Illinois Issues

better its financial position, the rating agency said, "the magnitude of the anticipated improvement is not sufficient to warrant a maintenance" of the state's high credit rating. Edgar said he was disappointed, but not surprised, by the rating agency's decision. "It is difficult in six months to overcome two years of poor financial habits," the governor reflected.

Some of those poor habits, however, seem to be reflected in the new budget. In particular, its balance rests precariously on some none-too-certain underpinnings:

• Revenue projections that could prove too optimistic. Perhaps the largest question mark is the budget's reliance on a slow but steady economic recovery for revenue gains. "Illinois is a very strong and vibrant state," observed Senate President Philip J. Rock (D-8, Oak Park), as the session drew to a close. "When the economy picks up, the rising tide will lift all the boats."

Initial indicators for the new fiscal year buoyed hopes that such confidence is not misplaced. General funds revenues in July were higher than a year ago, and sales tax collections were up for the first time in five months. The increase in sales taxes was particularly welcome after collections grew by only $36 million in fiscal year 1991 over fiscal year 1990, after falling off $73 million during the last four months from the 1990 pace. The sales tax slump was a major factor in causing the administration to drop its March revenue estimates for 1991 and 1992 by some $400 million, but even current projections are "way too optimistic," observed one veteran forecaster.

In addition, the Illinois unemployment rate fell in July to 6.7 percent from 7.3 percent in June, a drop of some 35,000 in the number of jobless workers. State employment security officials credited most of the gain to hiring for seasonal summer work like recreation centers, camps, and road construction. The jobless improvement was tempered, however, by a 19,000-person decline in the state's labor force, as job seekers unable to find work abandoned their efforts. If unemployment rates climb, the state budget suffers; more jobless workers spell less revenue from income and sales taxes and greater demands on welfare and other human service programs.

• A Medicaid financing plan the Bush administration wants to kill. Originally broached by the Illinois Hospital Association, the novel proposal became a way for budget negotiators to meet Edgar's goal of a balanced budget without carving far more deeply into human services than Democrats would accept.

Essentially, the plan calls for the state to use fees paid by hospitals and nursing homes to leverage additional federal aid. (See "State's Medicaid funding, or fingers in the dike," by Anthony Man, pp. 33-36.) The extra federal dollars will underwrite some $1.3 billion in health care for the poor that was missing from the governor's March budget plan. But deficit-conscious U.S. budget officials are determined to end what they call a raid on the federal treasury by the states, as Illinois became the 19th state to put into place an assessment plan.

Edgar and his top aides say they don't expect the White House budget-cutters to succeed. The new administration already has lobbied congressional heavyweights

'It is difficult in six months to overcome two years of poor financial habits,' the governor reflected

like House Ways and Means Chairman Dan Rostenkowski (D-8, Chicago) and House Minority Leader Robert H. Michel (R-18, Peoria) to preserve the assessment program.

But should the federal spigot be shut off, the budget bucket will no longer be full, leaving Edgar and the legislature with two equally unappealing choices —raise taxes or severely limit health care for hundreds of thousands of poor people. Even with the assessment plan in place, the budget settlement imposes painful cuts in state services to the needy. Some poor families will no longer receive state help to pay their home heating bills, for example, while single, childless adults who are deemed "not chronically needy" will be eligible for only nine months of welfare checks and medical care in 1992 and for only six months the next year.

By taking the budget axe to welfare programs, some Democrats believe Edgar has forfeited the surprisingly high level of support he enjoyed among black voters in the 1990 election. Just as likely, though, the governor's tough stance endeared him to conservative Republicans and many other Illinoisans who believe able-bodied adults should be working, not on the public dole.

• A handful of revenue enhancements, accounting changes and other cash management devices that look suspiciously like the "smoke and mirrors" relied on so often during the Thompson years. The measures include speeding up some tax collections, slowing down certain payments — including kicking over into fiscal 1993 the final 1992 school aid payment — and tapping surplus dollars from some earmarked funds. The creative financing techniques should produce a favorable impact of about $500 million on the budget's bottom line, according to legislative analysts, but could cause headaches in the future.

While critical to making ends meet this fiscal year, the dollars scrounged through such measures are one-time savings that won't be available again in fiscal year 1993. Surplus dollars can be taken from the earmarked accounts only once. Speeding up sales tax returns may get receipts to the state sooner, it but won't result in any more taxes being collected. Moreover, the state stands to lose some $75 million in surcharge receipts next year under terms of the surcharge compromise, which reduces the slice going to state coffers in fiscal 1993.

Edgar and his budget officials contend the one-time cash measures are legitimate fiscal tools because they are being used to help pay old bills. "Those are one-time expenditures, so a one-time source of revenue I think is appropriate," Edgar said.

In similar fashion, there are potential drawbacks in the tax relief plan that Edgar and the GOP leaders went to the wall to win in the legislative overtime. The law basically provides two kinds of real estate tax limitations. In the five collar counties of DuPage, Kane, Lake, McHenry and Will, property tax increases for school districts and most other local government units will be held to 5 percent or the rate of inflation, whichever is less. In Cook County, local government units will have to figure their property tax bills on the last known equalized assessed valuation, rather than on more current estimates of their tax base, in effect providing a one-year assessment freeze for homeowners and other real estate taxpayers.

One danger the new law poses for the governor and other tax lid champions is the possibility that it will not live up to subur-

August & September 1991/Illinois Issues /11


banites' expectations. Some who follow state government only casually might well interpret all the talk about tax caps to mean their tax bills won't go up; they are sure to be disappointed.

Moreover, even those aware that the new law is intended to hold collar county tax increases to no more than 5 percent could be surprised. In some cases, individual tax bills could go up by more than 5 percent because of various loopholes in the law. Taxes imposed by home-rule units, for example, are not covered, nor are bond retirement levies. In addition, the limit applies to a taxing district's total billings, not to individual tax bills. So some taxpayers may face increases greater than 5 percent as relative property values shift within the total tax base.

More significantly, however, the tax legislation places suburban schools and other taxing districts in a fiscal vise. In particular, the lids are likely to impair the ability of suburban schools to offer the high quality education for which they are renowned. School officials throughout suburbia predict the caps will mean larger classes, reduced program offerings and more districts on the State Board of Education's financial watch list.

If they are correct, Edgar could be hurt by a backlash from parents who are worried their children are no longer getting a first-rate education. Certainly the governor's stock already is down among rank-and-file members of the Illinois Education Association, which endorsed him for governor but whose membership is heaviest among suburban teachers.

Downstate educators, meanwhile, are concerned that suburban schools whose access to local tax dollars has been blocked by the tax caps will stake a greater claim on the state's limited resources at their expense. And school administrators across the state are incensed by the decision to delay a $175 million state aid payment until July, rather than make it in June.

Of course, such misgivings ultimately may prove to be unwarranted; the budget may hold together, and tax caps may prove to be an unmitigated success. Indeed, Edgar is confident they will. But for now, let the praise for the rookie governor be tempered by the memory of Hurricane Hazle.

Charles N. Wheeler III is a correspondent in the Springfield Bureau of the Chicago Sun-Times.

12/August & September 1991/Illinois Issues

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